EM ASIA CREDIT: Alibaba (BABA, A1/A+/A+) loses de-minimis exemption
"*ALIBABA FALLS 5.8% IN HK ON DE MINIMIS LOOPHOLE CLOSING;JD-5.9%" - BBG
- The U.S. Has announced removal of the “de minimis” exemption, which allowed low value imports (under $800) to avoid paying import duties.
- Plans to remove the exemption had already been announced in February, and should not come as a surprise. Nevertheless, spreads likely wider.
- Alibaba generates c. 10% of group revenues from its Alibaba International Digital Commerce group, which includes operations such as AliExpress.
- There is no reported breakdown for the U.S. market, however I would assume it is a relatively large share of this segment. The segment itself is loss making.
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The People’s Bank of China should retain its 3% inflation target and resist calls for 2% given the nation remains a developing country with a per capita GDP of around USD10,000, making a lower goal less conducive to economic vitality, according to Li Yongning, associate professor at the School of Economics of Tianjin Polytechnic University. China's shift from a prudent to a moderately loose monetary policy in 2025 would contradict an inflation target cut and send mixed signals to the market, Li noted. Instead, authorities should extend the 3% aim from an annual to longer duration timespan, such as over a government term or economic cycle, Li added.
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